by Calculated Risk on 12/14/2024 08:11:00 AM

The key economic reports this week are Retail Sales, Housing Starts, Existing Home Sales, the 3rd estimate of Q3 GDP, and November Personal income and outlays.

For manufacturing, November Industrial Production, and the December New York, Philly and Kansas City Fed surveys will be released this week.

The FOMC meets this week and is expected to cut rates by 25bp.

----- Monday, December 16th -----
8:30 AM: The New York Fed Empire State manufacturing survey for December. The consensus is for a reading of 5.8, down from 31.2.

----- Tuesday, December 17th -----
8:30 AM ET: Retail sales for November will be released.  The consensus is for a 0.5% increase in retail sales.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

9:15 AM: The Fed will release Industrial Production and Capacity Utilization for November.

This graph shows industrial production since 1967.

The consensus is for a 0.1% increase in Industrial Production, and for Capacity Utilization to increase to 77.2%.

10:00 AM: The December NAHB homebuilder survey. 

The consensus is for a reading of 46, unchanged from 46 the previous month. Any number below 50 indicates that more builders view sales conditions as poor than good.

----- Wednesday, December 18th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Housing Starts for November.

This graph shows single and multi-family housing starts since 1968.

The consensus is for 1.344 million SAAR, up from 1.311 million SAAR.

During the day: The AIA's Architecture Billings Index for October (a leading indicator for commercial real estate).

2:00 PM: FOMC Meeting Announcement. The Fed is expected to cut rates 25bp at this meeting.

2:00 PM: FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

----- Thursday, December 19th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 232 thousand initial claims, down from 242 thousand last week.

8:30 AM: Gross Domestic Product, 3rd quarter 2024 (Third estimate). The consensus is for real GDP at 2.8% annualized, unchanged from the second estimate of 2.8%.

8:30 AM: the Philly Fed manufacturing survey for December. The consensus is for a reading of 2.2, up from -6.0.

10:00 AM: Existing Home Sales for November from the National Association of Realtors (NAR). The consensus is for 3.97 million SAAR, up from 3.96 million.

The graph shows existing home sales from 1994 through the report last month.

11:00 AM: the Kansas City Fed manufacturing survey for December.

----- Friday, December 20th -----
8:30 AM: Personal Income and Outlays for November. The consensus is for a 0.4% increase in personal income, and for a 0.5% increase in personal spending. And for the PCE price index to increase 0.2%, and the Core PCE price index to increase 0.2%.  PCE prices are expected to be up 2.5% YoY, and core PCE prices up 2.9% YoY.

10:00 AM: University of Michigan's Consumer sentiment index (Final for December).

10:00 AM: State Employment and Unemployment (Monthly) for November 2024

by Calculated Risk on 12/13/2024 07:36:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

For deaths, I'm currently using 4 weeks ago for "now", since the most recent three weeks will be revised significantly.

Note: "Effective May 1, 2024, hospitals are no longer required to report COVID-19 hospital admissions, hospital capacity, or hospital occupancy data."  So I'm no longer tracking hospitalizations.

COVID Metrics
	Now	Week Ago	Goal
Deaths per Week	384	488	≤3501
1my goals to stop weekly posts, 🚩 Increasing number weekly for Deaths ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported.

Although weekly deaths met the original goal to stop posting, I'm continuing to post now that deaths are above the goal again - and at a minimum, I'll continue to post through the Winter.  

Weekly deaths are now declining but might start to increase based on wastewater sampling.  Weekly deaths are still above the low of 313 in early June 2024.

And here is a graph I'm following concerning COVID in wastewater as of December 7th:

This appears to be a leading indicator for COVID hospitalizations and deaths.

COVID in wastewater is fairly low - almost double the lows of last May - and increasing.  Something to watch.

by Calculated Risk on 12/13/2024 01:04:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Part 2: Current State of the Housing Market; Overview for mid-December 2024

A brief excerpt:

Earlier this week, in Part 1: Current State of the Housing Market; Overview for mid-December 2024 I reviewed home inventory, housing starts and sales.

In Part 2, I will look at house prices, mortgage rates, rents and more.
...
The Case-Shiller National Index increased 3.9% year-over-year (YoY) in September and will be about the same YoY in the October report (based on other data).
...
Other measures of house prices suggest prices will be up about the same YoY in the October Case-Shiller index as in the September report. The NAR reported median prices were up 4.0% YoY in October, up from 3.6% YoY in September.

ICE reported prices were up 3.0% YoY in October, up from 2.9% YoY in September, and Freddie Mac reported house prices were up 3.7% YoY in October, down from 3.8% YoY in September.

There is much more in the article.

by Calculated Risk on 12/13/2024 09:57:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Q3 Update: Delinquencies, Foreclosures and REO

A brief excerpt:

We will NOT see a surge in foreclosures that would significantly impact house prices (as happened following the housing bubble) for two key reasons: 1) mortgage lending has been solid, and 2) most homeowners have substantial equity in their homes.
...
This graph shows the nominal dollar value of Residential REO for FDIC insured institutions based on the Q3 FDIC Quarterly Banking Profile released yesterday. Note: The FDIC reports the dollar value and not the total number of REOs.

The dollar value of 1-4 family residential Real Estate Owned (REOs, foreclosure houses) was mostly unchanged YOY from $747 million in Q3 2023 to $765 million in Q3 2024. This is historically extremely low.

There is much more in the article.

by Calculated Risk on 12/13/2024 07:55:00 AM

From BofA:

Since our last weekly publication, our 3Q GDP tracking estimate has moved up a tenth to 3.0% q/q saar. Additionally, our 4Q US GDP tracker was unchanged at 2.1% q/q saar. [Dec 13th estimate]
emphasis added

From Goldman:

We left our Q4 GDP tracking and domestic final sales estimates unchanged at +2.4% and +2.0%, respectively. [Dec 5th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2024 is 3.3 percent on December 5, up from 3.2 percent on December 2. After recent releases from the US Census Bureau, the Institute for Supply Management, and the US Bureau of Economic Analysis, the nowcast of fourth-quarter real gross private domestic investment growth increased from 1.2 percent to 1.8 percent. [Dec 5th estimate]

by Calculated Risk on 12/12/2024 09:52:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Friday:
• No major economic releases scheduled.

by Calculated Risk on 12/12/2024 05:10:00 PM

What this means: On a weekly basis, Realtor.com reports the year-over-year change in active inventory and new listings. On a monthly basis, they report total inventory. For November, Realtor.com reported inventory was up 26.2% YoY, but still down 21.5% compared to the 2017 to 2019 same month levels. 

 Now - on a weekly basis - inventory is up 23.5% YoY.

Realtor.com has monthly and weekly data on the existing home market. Here is their weekly report: Weekly Housing Trends View—Data for Week Ending Dec. 7, 2024

• Active inventory increased, with for-sale homes 23.5% above year-ago levels

For the 57th consecutive week, the number of homes for sale has increased compared with the same time last year. However, this week’s growth was the slowest since March 2024. As the mortgage rates remain close to 7%, the combination of sluggish listing activity and muted buyer demand has led to a slowdown in inventory growth. The pace of growth suggests a more cautious environment where sellers are holding back, and buyers are taking their time—creating a more balanced but tentative housing landscape.

• New listings—a measure of sellers putting homes up for sale—increased 16.5% post-Thanksgiving, and adjusted to 2.6% after accounting for holiday timing

The number of newly listed homes has returned to its pre-Thanksgiving level, resulting in a large year-over-year growth as Thanksgiving falls later in 2024 compared with 2023. After adjusting for the holiday timing factor, the year-over-year increase in new listings is 2.6%.

Here is a graph of the year-over-year change in inventory according to realtor.com. 

Inventory was up year-over-year for the 57th consecutive week.  

However, inventory is still historically low.

New listings remain below typical pre-pandemic levels.

by Calculated Risk on 12/12/2024 01:05:00 PM

Today, in the Calculated Risk Real Estate Newsletter: The "Home ATM" Mostly Closed in Q3

A brief excerpt:

During the housing bubble, many homeowners borrowed heavily against their perceived home equity - jokingly calling it the “Home ATM” - and this contributed to the subsequent housing bust, since so many homeowners had negative equity in their homes when house prices declined.
...
Here is the quarterly increase in mortgage debt from the Federal Reserve’s Financial Accounts of the United States - Z.1 (sometimes called the Flow of Funds report) released today. In the mid ‘00s, there was a large increase in mortgage debt associated with the housing bubble.

In Q3 2024, mortgage debt increased $105 billion, up from $99 billion in Q2, and down from the cycle peak of $467 billion in Q2 2021. Note the almost 7 years of declining mortgage debt as distressed sales (foreclosures and short sales) wiped out a significant amount of debt.

However, some of this debt is being used to increase the housing stock (purchase new homes), so this isn’t all Mortgage Equity Withdrawal (MEW).

by Calculated Risk on 12/12/2024 12:26:00 PM

The Federal Reserve released the Q3 2024 Flow of Funds report today: Financial Accounts of the United States.

The net worth of households and nonprofits rose to $168.8 trillion during the third quarter of 2024. The value of directly and indirectly held corporate equities increased $3.8 trillion and the value of real estate decreased $0.2 trillion..
...
Household debt increased 3 percent at an annual rate in the third quarter of 2024. Consumer credit grew at an annual rate of 2.5 percent, while mortgage debt (excluding charge-offs) grew at an annual rate of 3.1 percent.

Click on graph for larger image.

The first graph shows Households and Nonprofit net worth as a percent of GDP.  

Net worth increased $4.8 trillion in Q3 to an all-time high.  As a percent of GDP, net worth increased in Q3 but is below the peak in 2021.

This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc.) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.

The second graph shows homeowner percent equity since 1952.

Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.

In Q3 2024, household percent equity (of household real estate) was at 74.7% - down from 75.0% in Q2, 2024. This is close to the highest percent equity since the 1960s.

Note: This includes households with no mortgage debt.

The third graph shows household real estate assets and mortgage debt as a percent of GDP.  

Mortgage debt increased by $105 billion in Q3.

Mortgage debt is up $2.58 trillion from the peak during the housing bubble, but, as a percent of GDP is at 45.2% - down from Q2 - and down from a peak of 73.3% of GDP during the housing bust.

The value of real estate, as a percent of GDP, decreased in Q3 and is below the peak in Q2 2022, but is well above the median of the last 30 years.

by Calculated Risk on 12/12/2024 10:14:00 AM

The FDIC released the Quarterly Banking Profile for Q3 2024:

The Industry’s Net Income Decreased From the Prior Quarter, Driven by One-Time Items
Third quarter net income for the 4,517 FDIC-insured commercial banks and savings institutions decreased $6.2 billion (8.6 percent) from the prior quarter to $65.4 billion. The quarterly decrease in net income was largely driven by the absence of about $10 billion in one-time gains on equity security transactions reported in the previous quarter. The absence of these nonrecurring gains was partially offset by strong net interest income in the third quarter.
...
Asset Quality Metrics Remained Generally Favorable, Though Weakness in Certain Portfolios Persists
The past-due and nonaccrual (PDNA) loan ratio increased 6 basis points from the prior quarter to 1.54 percent. This ratio was 18 basis points higher than the year-earlier quarter but below the pre-pandemic average of 1.94 percent.2 Quarterly, banks reported an increase in the PDNA ratio in credit card loan portfolios (up 20 basis points to 3.36 percent), nonfarm nonresidential commercial real estate (CRE) loan portfolios (up 7 basis points to 1.69 percent), 1–4 family residential loan portfolios (up 3 basis points to 1.83 percent), and auto loan portfolios (up 5 basis points to 3.13 percent). Annually, the industry reported the largest PDNA increases in nonfarm nonresidential CRE loan portfolios (up 43 basis points to 1.69 percent), credit card loan portfolios (up 27 basis points to 3.36 percent), and commercial and industrial loan portfolios (up 20 basis points to 1.17 percent).

The industry’s net charge-off ratio decreased 1 basis point to 0.67 percent from the prior quarter but was 16 basis points higher than the year-earlier quarter. This ratio was also 19 basis points above the pre-pandemic average and remained the highest quarterly ratio reported by the industry since second quarter 2013. Credit card and nonfarm nonresidential CRE loan charge-offs drove the quarterly decrease in the net charge-off ratio, which was partially offset by an increase in commercial and industrial loan charge-offs. The credit card net charge-off ratio was 4.48 percent in the third quarter, down 34 basis points quarter over quarter but still 100 basis points higher than the pre-pandemic average. The net charge-off ratio for nonfarm nonresidential CRE loans decreased 9 basis points quarter over quarter to 0.29 percent but was 25 basis points higher than the pre-pandemic average.
emphasis added

Click on graph for larger image.

From the FDIC:

The Number of Problem Banks Increased
The number of banks on the FDIC’s “Problem Bank List” increased from 66 to 68. Total assets held by problem banks rose $3.9 billion to $87.3 billion. Problem banks represent 1.5 percent of total banks, which is within the normal range of 1 to 2 percent of all banks during non-crisis periods.

This graph from the FDIC shows the number of problem banks.